We keep hearing about folks having to drop $ 1000 a month for insulin.  It’s simply reprehensible- especially once you know the cost to produce a dosage of insulin is less than a buck!

Part of the problem are those “health care plans” that TheDonald made legal, after the Affordable Care Act (Obamacare) attempted to rationalize the health care system.  You know- so that the cost for insurance would be reasonable and affordable.  Except that those newly approved plans cover virtually nothing.  Often, their deductible is so high that they really never provide any benefit to the patient.  And, they don’t really cover the costs of the drugs these folks need.

Just another manifestation of the problem with  our health care delivery system.   Which is compounded by the process of collusion between drug companies, pharmacy benefit managers (PBM), and insurers.  The system is rigged to benefit the PBM.  Not because they are nice guys- but because they have the power to include or exclude drugs we can buy- or simply prioritize them differently.

What these PBMs do is work a series of rebates off the drugs they sell.  While you and I are paying list prices, the PBMs earn rebates from the sale of drugs, and share those rebates with the insurers.  And, you can bet that the drugs with the highest rebates are the ones pushed by the PBMs.   So, big pharma raises the price of drugs so they can offer bigger rebates to the PBMs, which are then passed along to insurance companies (and part of which is retained by the PMBs)- and those drugs that earn the highest profits are then promoted to you and me.

(That really means if big pharma raised the price of the drug to $100 a dose, so it could offer a $50 rebate, it still gets the same price for the drug that it initially projected.  But, that $50 rebate split between the PBM and the insurer provides an incentive for the insurer to choose to use its drug.  So, there’s more units of that $ 50 drug sold.   So, despite the illogic of the system, the higher the drug price (which affords higher rebates), the greater the revenue the drug will accrue.  Now you know why the cost of insulin therapy in the USA has exploded from $ 25 to some $ 1000 a month.)

And, then, there’s the brand-name vs. generic drug issue.  Yes, our brand name drugs are typically the most expensive in the world.  But, once the patent runs out, then generics jump into action.   Not surprisingly, we Americans are the most prolific users of generics (some 90% of all prescriptions are filled via generic formularies). Those generic prices are lower than found around the developed world (mostly because there are price controls in Europe for generic drugs).   So, many of you would have been surprised- before you finished this last paragraph- to find that the CPI index for drugs (called the CPI-Rx) has been negative for the past three years.

When the FDA (which has accelerated drug approvals since 2017) approves a brand name drug, that new competes with other older drugs- and there is some price competition.  But, when a generic is approved, the price point is dramatically lowered.

But, there are exceptions.  Insulin comes to mind- because while it is a pharmaceutical, it’s a biologic.

Now, we need to define biosimilars.   These are products that are highly similar to – plus no meaningful clinical differences from- an already approved biological product.   Yet, biosimilars have been very slow to achieve FDA approval.

A little background is needed now.  There are two types of diabetes, type 1 or childhood, and type 2. Type 1 patients are unable to produce their own insulin- they need a supply of the drug for life.  Type 2, the more prevalent form (95% of diabetics have this type), hits older subjects and folks that are overweight- they don’t really need insulin, but about 1/3 of them inject it to ensure blood sugar control.   And, while diabetics comprise less than 10% of the US population, 25% of all US health care costs are devoted to their needs.  (40% of those who succumbed to COVID-19 were diabetics.)

The insulin market is currently controlled by three companies- Eli Lilly, Novo Nordisk, and Sanofi.  That’s right- these three companies provide 90% of the world’s insulin supplies.  And, these folks don’t supply our drug stores or our insurance companies- they provide their drugs to PBM’s (Pharmacy Benefit Managers).  And, if 90% of the supply for three vendors wasn’t an issue, more than ¾ of the supply comes from 3 PBMs- CVS (Caremark), Cigna (Express Scripts), and United Health (OptumRx).

Why did I pick on insulin to explain this issue?  Because it’s a biologic, as we discussed above. It’s not chemically produced, so generic formulations are far more difficult to develop FDA approval.  That’s why that newly approved biosimilar has the opportunity to break this chain of corruption.

One of the first insulin biosimilars is Semglee-  actually a long acting insulin analogue (glargine).  This drug comes in 10 ml vials and 3 ml prefilled pens (administered subcutaneously once daily).   Semglee is made by Viatris, formed last year as a combination of Mylan Pharmaceuticals and Pfizer’s (acquired) Upjohn division.

Even with the PBMs, Semglee is going for about 1/3 the price of one of the big three offerings.  ($ 120 versus $ 350- but that’s still way above the $25 a vial price in the rest of the developed countries.)   And, let’s not forget that Type 2 diabetics don’t really need insulin- they more often rely on GLP-1 analogs- a once a week injection, as opposed to once a day insulin.  Moreover, while insulin use often is associated with patient weight gain, these GLP-1 analogs involve a small weight loss- which may also alleviate some of the diabetic tendencies.

Of course, the real solution for Type 1 diabetics is not cheaper insulin- but stem cell devices that produce insulin within the body to match the metabolic demands.

But, that’s a topic for (yet another) blog.

17 days until one can file taxes.  Have you read my book explaining how you can pay the lowest amount of taxes required by law yet?